As a business advisor, I always have a conversation about financial planning with my clients because it is such an important building block to ensure a sustainable enterprise. The immediate response I receive is usually the business owner stating that he/she has a bookkeeper or accountant.
I then go on to explain that I am not referring to the management of the business finances and cash flow planning, but financial planning which relates to the risk mitigation actions and solutions which have been implemented relating to unplanned events and the future financial wellbeing of the business owner(s) and staff.
The intent of this article is to highlight some of the financial planning elements which are overlooked or often put on the back burner. The reason this is a critical conversation is that the business is the income-earning vehicle for the business owner(s) and needs to be protected to support the sustainability of the livelihoods of the business owner(s) and staff.
There are three main pillars to consider from a holistic financial planning perspective.
The business owner (in his/her personal and business capacities)
The enterprise as an entity
The enterprise as an employer
It is of paramount importance to remember that the financial affairs of business owners are interconnected with the enterprise. This also makes financial planning more complicated. But how do you eat an elephant? The answer – “piece by piece”. This also holds true for financial planning.
It is prudent to address the following elements as part of a continuous dialogue between us and our appointed and qualified financial adviser(s). Please remember that financial planning advice is regulated which means that your financial adviser(s) needs to be trained and accredited to provide specialist advice.
Here are some questions to think about.
As a business owner, you have personal financial planning elements to address.
Ask yourself if:
You have a signed and up-to-date personal will?
You have an estate plan and when last was it reviewed?
You have sufficient risk cover to address all cash flow needs and requirements should you die or become permanently disabled?
You addressed your personal savings and investment needs?
The business as a going concern brings about other financial planning considerations.
Are all the assets of the business insured? When last was the insurance reviewed?
Do you have key staff who will have a detrimental impact on the continuity of the business if they should die or become permanently disabled?
If the business has more than one owner – will the remaining owner(s) have sufficient funding available to purchase the shareholding, should one or more of the owners die or become permanently disabled?
Are there debit or credit loan accounts which need to be settled should one or more of the business owners die or become permanently disabled?
Have you or the co-owner(s) of the business signed personal surety for business debt?
As an employer, there are a couple of primary considerations.
Have you and the co-owner(s) made sufficient provision to create assets outside the business to ensure a well-funded retirement for yourself(ves)?
Do you have medical aid benefits for yourself and the co-owner(s) of the business?
Does the business make provision for retirement funding, risk cover, and medical aid benefits for staff?
I trust that these questions will empower you to put risk and financial wellbeing solutions in place which will support the sustainability of the enterprise and serve the financial needs and requirements you and your staff have. Remember that your financial plan needs to address your unique circumstances and affordability parameters.
Do you also need any of the following services?
Business advisory support/Accountability partner?
Business finance?
Banking facility audit?
Family business advisory services?
Help with the buying or selling of a business?
Speak to your SFP financial adviser who will introduce you to the designated subject matter expert on the SFP enterprise panel who would be able to address your specific business need or requirement.